NZ dollar unchanged, treading water ahead of RBNZ, budget speech

The New Zealand dollar was unchanged against the greenback in quiet Monday trading and ahead of the central bank's rate decision this week.

The kiwi traded at 70.20 US cents as at 5pm in Wellington from 70.16 US cents as at 8am in Wellington from 70.18 cents in New York on Friday. The trade-weighted index was at 73.34 from 73.25 in New York, below the 75 level the Reserve Bank was expecting in the second quarter.

The kiwi dollar is being driven by US dollar moves on the day, which have been fairly muted as investors keep one eye on oil prices - which hit their highest in more than three years as global supplies remained tight. The Kiwi is expected to remain fairly steady ahead of the central bank's rate decision this week. The Reserve Bank expected to hold the official cash rate at 1.75 percent but the statement and press conference will be in the limelight as it is new governor Adrian Orr's first at the helm.

"Investors are just waiting to see what spin Orr puts on things," said Ross Weston, a senior trader at Kiwibank. Weston said that a pre-budget speech by Finance Minister Grant Robertson, also on Thursday, will garner some interest "depending on whether there is stuff in there that we don't already know," he said.

Otherwise, "we are at the mercy of what the US dollar does," he said. Bank of New Zealand senior markets strategist Jason Wong said the kiwi has fallen sharply since mid-April as sentiment for the USD improved. "After spending much of the year stuck in a tight 0.72-0.74 range, our central view would be for the range to be a couple of cents lower nearer 0.70-0.72 over the next few months," he said in a note.

Wong also said that "New Zealand monetary policy won’t be providing any support to the NZD over the foreseeable future. Indeed, the NZD lost its high-yield status some time ago and as the Fed Funds rate rises alongside a flat NZ OCR."

It traded at 93.34 Australian cents from 93.28 cents on Friday in New York. It kiwi fell to 4.4617 yuan from 4.4652 yuan on Friday and traded at 51.81 British pence from 51.89 pence. It was at 76.59 yen from 76.62 yen and at 58.70 euro cents from 58.74 cents.